The U.S. cannabis market is growing, yet it remains divided by state-by-state rules, regulatory hurdles, and a federal landscape that keeps many financial pathways closed. While a majority of Americans live in states where access is legal and the market is poised for substantial revenue this year, the industry still contends with a vibrant black market and fragmentation that limits its total addressable market. California offers a vivid example: dispensaries advertise prominently, budtenders are a common sight at events, and the public-facing growth is real. Yet nationwide maturity is hampered by federal laws that block cannabis-related businesses from using traditional financial services, constraining growth for public and private companies involved in cultivation, distribution, transportation, inventory control, testing, and point-of-sale software. Against this backdrop, influential investors are outlining the forces shaping opportunities and risks for entrepreneurs and for early-stage and growth-stage investors alike.
The U.S. cannabis market: a state-led expansion with federal bottlenecks
More than three-quarters of the U.S. population lives in a state where cannabis access is permitted in some form, whether for medical, recreational, or both purposes. This geographic footprint has helped push the legal market toward a projected $33 billion in annual sales this year. The momentum is undeniable, and it has attracted capital from investors who see cannabis as a fast-evolving consumer category with measurable growth potential across multiple adjacent sectors—brand-building, packaging, distribution, testing, and technology platforms that support compliance and retail operations. However, this growth story is not uniform, and the sector’s upside is tempered by ongoing regulatory complexity and a productive, yet persistent, black market that continues to erode margins and complicate competitive dynamics. The discrepancy between legal sales and illicit activity creates a challenging environment for operators who must navigate varying state rules around licensing, product formulations, labeling, advertising restrictions, and banking.
A central obstacle remains federal policy, which continues to bar cannabis-related businesses from accessing traditional banking, payment processing, and other essential financial services. This prohibition forces many operators to rely on cash-intensive operations, increases risk, complicates tax compliance, and imposes additional costs on compliance and security. The absence of a seamless banking system also hampers growth trajectories for growers, distributors, transporters, and the software companies that serve those verticals, from inventory management to compliance reporting and consumer-facing point-of-sale solutions. The resulting market fragmentation—where state regulators impose different standards, tax regimes, and enforcement priorities—creates artificial constraints on total addressable market and complicates scale economies for both public and private players.
In California, the public-facing signs of a maturing market are unmistakable. Dispensaries advertise on freeway billboards, and budtenders are a familiar sight at weddings and other social events. Yet as observers note, this maturity is uneven and provincial rather than national, reflecting the patchwork regulatory framework that governs cannabis nationwide. Close observers emphasize that the industry’s expansion will continue to hinge on federal policy changes that could unlock access to traditional banking and payment rails, enable broader investment activity, and harmonize some of the disparate state-level rules that currently constrain product testing, distribution, and retail operations. In the meantime, market participants must contend with compliance costs, licensing requirements, and the ongoing need to demonstrate quality and safety across a growing number of products and jurisdictions.
On the investment side, a cadre of seasoned professionals is weighing where to place bets as the cannabis category remains among the few consumer goods spaces with consistently high growth potential despite regulatory headwinds. Four investors highlighted in recent discussions bring different perspectives and areas of expertise:
- Jacqueline Bennett, managing partner and co-founder of Highlands Venture Partners, brings a focus on the intersection of consumer brands and scalable platforms, evaluating how incumbents and startups can win through differentiated products, efficient go-to-market strategies, and robust operations.
- Yoni Meyer, partner at Casa Verde Capital, emphasizes the cannabis ecosystem’s long-term potential and the importance of building infrastructure that can support compliant growth across multiple states, including cultivation, distribution, and retail technology.
- Matt Hawkins, managing partner and co-founder of Entourage Effect Capital, concentrates on creating value through a mix of debt and equity structures, portfolio diversification, and a keen eye for risk-mitigated expansion strategies in a nascent but rapidly evolving market.
- Emily Paxhia, managing director at Poseidon Investment Management, highlights the category’s status as a thriving consumer packaged goods (CPG) market and speaks to the talent and strategic hiring needs required to propel portfolio companies forward.
These investors underscore a broader pattern: despite regulatory obstacles, the cannabis sector is attracting capital as investors seek to capitalize on a nascent yet growing market with significant room to scale through channels like brand-building, logistics optimization, and technology-enabled compliance. They also recognize that success in this space is as much about managing regulatory risk and access to capital as it is about product innovation and consumer engagement.
The discourse around cannabis investment has recently extended beyond traditional funding rounds into broader market signals and strategic talent moves. Emily Paxhia participated in a discussion on a social media platform to elaborate on topics raised by a survey of investors and entrepreneurs. She described cannabis as “today’s fastest-growing consumer packaged goods category,” a characterization that captures the category’s perceived momentum and its potential to deliver measurable returns in the near term. The conversation touched on the current market reality: while delivery services are increasingly saturated, there is ongoing demand for experienced marketing and product leadership to support growth across Poseidon’s portfolio companies. Paxhia indicated an active search for professionals with CP G experience in marketing, product management, and related roles to help accelerate portfolio performance. This emphasizes a broader trend in cannabis investing: as markets mature, the demand for seasoned talent who can build scalable consumer brands and robust operations becomes a critical determinant of success.
As the week’s coverage progressed, the industry signaled a measured optimism about long-term potential even as it acknowledged short-term headwinds. The cannabis investment narrative centers on a few core themes: the need for scalable, compliant business models across jurisdictions; the ability to attract and retain top-tier talent capable of driving growth in a complex regulatory environment; and the ongoing importance of financial infrastructure—banking, payments, and risk management—that can unlock broader participation from institutional investors. These themes align with a broader understanding of how regulated consumer categories evolve: early-stage experimentation gives way to more mature, scale-focused approaches that rely on robust operations, rigorous governance, and disciplined capital allocation. The sector’s trajectory will likely continue to be shaped by the pace at which federal policy evolves, the capacity of operators to achieve profitability in a fragmented market, and the readiness of investors to deploy capital in ways that balance risk and reward.
In the near term, observers expect continued emphasis on building the right teams, refining go-to-market strategies, and investing in platforms that can streamline compliance and financial operations while delivering consistent consumer experiences. For Poseidon and similar firms, this includes actively recruiting professionals with deep CPG expertise who can navigate marketing, product development, and portfolio management. As regulatory changes gradually take effect and more states align their rules, cannabis investors will likely continue to evaluate opportunities through a lens that prioritizes scalable business models, durable branding, and governance structures that can withstand the vicissitudes of a highly regulated market.
Lumigo and the craft of a product-led growth playbook
In a separate thread of market activity, Lumigo—an observability and debugging platform for cloud-native applications—has emerged as a notable case study in product-led growth (PLG) and the strategic value of transparent, investor-facing storytelling. Since its launch in 2019, Lumigo has raised a total of $38 million from investors, illustrating the appetite for infrastructure software that helps operators manage complex cloud environments. Last November, Lumigo closed a $29 million Series A round, a milestone that underscored both investor confidence and the company’s potential to scale in a competitive market for cloud-native monitoring tools. In discussions surrounding the company’s fundraising and product strategy, some observers noted that the team treated certain market analyses and financial projections as commercially sensitive information, a decision that reflected prudent governance and a recognition that competitive intelligence can be dangerous to disclose in public materials. A commentator on the company’s deck noted that the sensitivity around these analyses makes sense given the strategic value of such data in a fast-evolving market.
Lumigo’s experience illuminates several key dynamics for PLG-oriented businesses: first, a robust product narrative can serve as the backbone of growth, with customer adoption and retention driving expansion. Second, building a strong product operations function becomes essential to scale product-driven initiatives, aligning development, customer feedback, and go-to-market activities around a single vision. In interviews and industry commentary, leaders emphasized a shift toward product-centric organizations where product managers are no longer the sole owners of customer interactions or feature delivery. Instead, a dedicated product ops function can enable better prioritization, more rigorous experimentation, and a more predictable delivery pipeline.
Product ops, as described by industry voices, is analogous to the established practices in sales and marketing operations. It represents a formalization of the processes that connect customer insights with product strategy, ensuring that the product development lifecycle is anchored in measurable outcomes and customer value. In practice, this means creating a team responsible for defining metrics, standardizing tooling, coordinating across product management, engineering, and customer-facing teams, and ensuring that product capabilities align with the company’s broader goals. The overarching aim is to position the product at the center of the business model—the “center of the wheel”—with every other function driving toward a cohesive product-led growth strategy. This perspective is increasingly common among software companies seeking sustainable growth, where the product itself becomes the primary driver of acquisition, expansion, and retention.
As conversations around PLG mature, industry voices highlight the practical steps needed to realize this approach. They emphasize building a strong product ops team that can orchestrate cross-functional collaboration, establish clear responsibilities for product-led initiatives, and implement governance that ensures consistent execution. The core insight is that PMs, while central to product strategy, must be empowered with the right tools, authority, and processes to translate customer needs into scalable solutions. This shift represents a broader evolution in product leadership, acknowledging that effective product management requires more than voice of the customer interactions; it requires a formalized operational backbone that supports rapid, data-driven decision-making across the product lifecycle.
In the broader market, Lumigo’s experience and similar narratives reinforce a growing appetite for product-led, platform-oriented growth strategies across the software landscape. Companies are increasingly recognizing that a strong product plus disciplined product operations can unlock faster growth while maintaining quality and customer satisfaction. The takeaway for operators and investors is clear: as markets become more competitive and customers demand more from software platforms, investing in product operations as a strategic capacity can yield outsized returns by enabling teams to move quickly, measure impact, and iterate with intention.
Product-led growth in practice: lessons for founders and teams
- Prioritize structuring a product-centric culture: ensure product decisions are guided by customer data, usage patterns, and outcome-focused metrics rather than opinions or silos.
- Build a dedicated product ops function early: this function should own cross-functional processes, tool selection, and governance to maintain alignment between product strategy and execution.
- Treat the product as the growth engine: design experiences that encourage adoption, expansion, and long-term retention rather than focusing solely on new-user acquisition.
- Balance openness with strategic discretion: share enough information to build trust and momentum, but protect commercially sensitive insights that could undermine competitive advantage.
- Align investor communications with product milestones: demonstrate a clear link between product investments, customer outcomes, and business growth to maintain credibility with capital partners.
Dear Sophie: International Entrepreneur Parole versus O-1 visas—the tradeoffs
In parallel with market developments, discussions about immigration pathways for entrepreneurs continue to influence startup strategy and talent deployment. A frequently revisited topic is the comparison between International Entrepreneur Parole (IEP) and the O-1 visa, a nonimmigrant classification for individuals with extraordinary ability in science, education, business, or athletics. In recent exchanges, a reader asked whether IEP offers any advantages over an O-1 visa, noting that IEP may require substantial institutional backing, such as $250,000, which could make obtaining an O-1A seem more attainable by comparison. The inquiry also suggested that the O-1A route might offer more advantages overall, prompting further reflection on the relative merits of these pathways for aspiring immigrant founders.
The IEP program is designed to facilitate the entry or extension of business founders who can demonstrate they have an active, viable startup in the United States and meet certain criteria demonstrating potential for growth. The emphasis is often on the founder’s ability to contribute to job creation and to bring innovative ideas to the market, with a focus on the stage and viability of the business, the investor backing, and the applicant’s role in the enterprise. In contrast, the O-1 visa is grounded in the recognition of extraordinary ability in a given field, including demonstrable achievements, a track record of leadership or impact, and recognized expertise. The O-1 route can be advantageous for individuals who can present a compelling portfolio of awards, publications, or high-level accomplishments that establish their exceptional ability and thus support a straightforward visa process.
From a strategic perspective, founders weighing these paths consider several factors: the level of institutional support required, the speed and predictability of the visa process, the potential for longer-term residency prospects, and the degree to which a given visa channel aligns with the founder’s business plan and hiring needs. On the surface, it may appear that O-1A offers broader recognition and flexibility for highly accomplished individuals, whereas IEP emphasizes entrepreneurial activity and support mechanisms that can accelerate entrepreneurial entry. However, the choice is highly individual and context-dependent. Startups may prefer IEP when they have credible investor backing and a business plan that demonstrates potential for growth and job creation within the United States. Conversely, founders who can construct a compelling case for extraordinary ability, along with a proven track record of significant achievements, may find the O-1 route more efficient or advantageous.
The underlying takeaway is that both pathways offer distinct advantages depending on the founder’s situation, the nature of the business, and the timing of immigration goals. For many entrepreneurs, a blended approach or parallel consideration of multiple immigration options can be prudent, allowing them to pursue their business ambitions while addressing immigration needs in a proactive way. The decision requires careful evaluation of the individual’s credentials, the startup’s capital structure, the level of investor backing, and the anticipated growth trajectory of the enterprise. While IEP can be a viable option for founders with robust institutional support and a compelling business plan, the O-1 visa remains a powerful choice for those who can demonstrate extraordinary ability and a proven record of achievement, particularly if it aligns with the startup’s hiring and expansion plans.
Recurring revenue financing in turbulent markets: a growth lever?
As market conditions become more volatile, founders often confront the question of how to finance growth without surrendering control or diluting equity too aggressively. In this context, recurring revenue financing has emerged as a potential mechanism to accelerate growth by leveraging the predictability of future cash flows. A prominent example in discussion is Pipe, a startup that specializes in offering upfront capital against expected, recurring revenue streams. The premise is straightforward: by monetizing projected recurring revenue, a company can secure upfront capital to fuel expansion while maintaining a favorable financing structure that rewards the business’s existing revenue trajectory rather than relying solely on equity funding.
Proponents argue that recurring revenue financing provides several benefits. It can deliver liquidity without requiring the company to surrender a large equity stake, thereby preserving ownership and control for founders and existing shareholders. It can also align financing terms with the company’s actual revenue stream, potentially offering a more favorable cost of capital as the business de-risks future earnings through predictable performance. For a company with recurring revenue commitments and a clear growth path, this approach can unlock capital for scaling, investments in sales and marketing, product development, and market expansion, particularly in downturns when traditional fundraising becomes more challenging.
Critics, however, warn that such financing is not a cure-all. The terms can be sensitive to revenue volatility, churn, or delays in customer uptake. The availability of capital from third-party providers who finance recurring revenue is not universal, and agreements may impose covenants or performance conditions that constrain operational flexibility. Founders considering this route must carefully assess the implications, including how it affects cash flow, the vulnerability to changes in the business environment, and the potential for future refinancing costs if conditions shift. In practice, the decision to pursue recurring revenue financing hinges on a company’s revenue stability, customer retention, and the reliability of forecasting. When these conditions are favorable, this approach can be an attractive option for scalable growth in a turbulent market, provided the team remains mindful of the ongoing expectations and obligations embedded in such financing arrangements.
The broader takeaway is that as investors and operators contend with macroeconomic uncertainty, creative financing mechanisms that leverage existing, predictable revenue streams can become an important part of a diversified funding strategy. Founders should conduct a careful, data-driven evaluation of the terms, risks, and strategic fit of recurring revenue financing within their overall capital plan. This includes scenario planning for churn, expansion into new markets, and the potential need to refinance under changing market conditions. When employed judiciously, recurring revenue financing can augment growth without sacrificing the core equity structure, enabling teams to pursue opportunities that might otherwise be constrained by access to capital in a challenging environment.
Mayfield’s Navin Chaddha: two downturns, two playbooks
The investment landscape is defined not only by immediate market opportunity but also by long-run resilience through cycles. Mayfield, a venture capital firm, has positioned its perspective around downturn experiences and the lessons learned from navigating through the 2008–2009 financial downturn as well as more recent market stress. Navin Chaddha, managing partner at Mayfield and a three-time founder, has observed more than six decades of entrepreneurial activity across multiple downturns and expansions. In his analysis, downturns function as catalysts that reconfigure the technology landscape, rewarding teams and strategies that are adaptable and that maintain focus on durable unit economics and customer value. Through his lens, every downturn carries a degree of risk but also the potential for transformative pivots that yield long-term competitive advantage.
Chaddha’s reflections emphasize that while each downturn is different, some principles recur across cycles. Founders should anticipate pivots, even near-failure moments, and develop a plan to navigate through them. He highlights the importance of staying committed to a core mission while adjusting the business model to respond to changing market dynamics. His guidance also includes practical advice for teams to stay lean, preserve cash, and prioritize sustainable growth over rapid expansion fueled by speculative demand. The “new normal” that emerges after a downturn refers to an environment characterized by more disciplined cost structures, greater emphasis on profitability, and a cautious but opportunistic approach to hiring and investment. For investors, the message is to identify resilient business models and management teams with proven execution capabilities, to diversify portfolios, and to remain flexible in the face of market shifts.
Mayfield’s perspective on downturns dovetails with broader industry lessons about risk management and strategic resilience. It reinforces the idea that market disruptions create opportunities for those who can pivot effectively, maintain a clear value proposition, and execute with discipline. In practice, this means founders should develop robust scenario planning, maintain tight control over burn rates, and cultivate a strong network of partners who can help navigate regulatory changes, capital constraints, and evolving customer needs. Investors, meanwhile, may favor businesses that demonstrate adaptable leadership, a clear path to profitability, and a credible strategy for weathering uncertainty. The takeaway is that downturns test the core viability of business models, but they also reward those who proactively align products, operations, and capital with a sustainable growth trajectory.
Tactical takeaways from the investment and technology conversations
- Cannabis investment remains fundamentally anchored in regulated growth, with outsized potential but significant barriers linked to federal policy and banking access. Success hinges on scalable, compliant operating models and the ability to attract top-tier talent capable of driving performance in a fragmented market.
- The industry’s talent needs are evolving. Even as demand for traditional roles persists, there is a growing emphasis on product, marketing, and operations positions that can support mature, consumer-grade brand-building and distribution capabilities.
- Product-led growth and product operations are increasingly recognized as central to scaling technology platforms. Operators should consider building a dedicated product ops function to synchronize customer feedback, product strategy, and cross-functional execution toward a shared growth objective.
- Immigration pathways remain a strategic consideration for global founders. Weighing options like International Entrepreneur Parole and the O-1 visa requires careful analysis of the business plan, the level of investor backing, and the founder’s credentials, with an eye toward the fastest route to stable operations and talent acquisition in the United States.
- Recurring revenue financing can be a viable tool for growth in turbulent markets, particularly for companies with predictable revenue streams and strong customer retention. However, it demands careful covenant management, a clear understanding of revenue risk, and a readiness to align capital structure with long-term strategic goals.
- Downturns test resilience but also reveal opportunity. The experiences of veteran investors and founder-operators underscore the value of disciplined capital management, strategic pivots, and a long-term perspective that prioritizes durable profitability and value creation.
Conclusion
The landscape for regulated cannabis, venture capital, and software-driven growth remains intricate and multifaceted. On one hand, the U.S. cannabis market continues to expand under a framework of state-level regulation that yields meaningful revenue possibilities, even as federal policy and banking constraints temper its pace and scale. On the other hand, the broader technology and investment ecosystems are actively embracing product-led growth, disciplined capital allocation, and innovative financing strategies to navigate a world of shifting macroeconomic conditions and regulatory uncertainty. Key voices across the industry—investors, operators, product leaders, and immigration advisors—offer a blended narrative of cautious optimism, operational excellence, and strategic foresight. They underscore the importance of building scalable, compliant business models, investing in the right talent and capabilities, and remaining adaptable in the face of change.
As the market continues to evolve, the most successful players will be those who can align product strategy with customer value, secure the right mix of capital to fund sustainable growth, and navigate the regulatory environment with pragmatism and foresight. The cannabis sector, like many tech-enabled markets, will be defined by teams that can move quickly, learn rapidly, and scale responsibly, delivering durable outcomes for customers, shareholders, and communities alike. The ongoing dialogue among investors, founders, and policy makers will shape a path toward greater maturity, broader financial access, and a clearer, more enforceable framework for responsible growth across the United States.
